This week HMRC gave TiPJAR the green light, but what is it and is it going to be the everywhere in 2021?
First things first. I think we can all agree the capitalisation in the name is annoying as SHiT, so from now on in this article we will be referring to it as Tipjar.
What the dickens is Tipjar?
It was founded by a couple of industry heavyweights in the form of Managing Director of Brewdog, James Brown and Founder of Rosa’s Thai, Alex Moore. According to their website Tipjar is ‘revolutionising the world of tipping by giving power to the workers and simultaneously alleviating the pain of handling card payment tips for businesses & managers’.
In its essence it is a replacement for the much maligned tronc system. Now we aren’t saying that tronc is out of date, but it is named after wooden boxes left in French churches in the 1920’s to collect money for the parish poor (taken from the French for these boxes tronc des pauvres, don’t you know).
There are many problems with tronc, not least the opportunity it gives employers to rip off staff and as a result of this the distrust many customers have for leaving electronic tips. In an ideal world everyone would tip in cash and we would all go home at the end of the night pockets overflowing with cold hard cash (or a fiver for a kebab after paying off the previous night’s bar tab). That ideal world didn’t exist before Covid and when we return even less people will be carrying around notes and coins, so a solution is needed.
Is Tipjar that solution?
The Tipjar system relies on customers scanning a venue specific QR code to pay tips via card, Apple Pay or Google Pay directly to the staff rather than it being added onto the bill. The QR code aspect is definitely the biggest obstacle Tipjar face but this is at the heart of the advantages it offers.
The good news is people became a lot more familiar with QR codes when going out in 2020 and whilst this may seem awkward it could easily become second nature to regular hospitality goers. Let us not forget it wasn’t that long ago many were saying that contactless payments would never take off and that more people than ever are asking the ‘does the tip go directly to you?’ question on receiving their bill.
Where Tipjar shines is that it makes owners/managements life easier and puts control over tips into hands of the staff. If the operator hands over control of Tipjar to the staff (using a free online platform) then, according to Tipjar, the business is no longer responsible for tax and National Insurance on the tips.
With the staff in charge of the tips they can use the platform to distribute the tips evenly amongst them or give more to someone who has worked more hours etc, however YOU want to divide it up.
Of course there is a cost to all this, but it seems minimal. For small businesses it is between £0 – £1.99 a month with a £10 – £25 set-up fee, for large multi-site businesses it is between £0.99 – £1.99 a day with a £99 set-up fee.
There is also a 4% transaction fee on each tip (the equivalent to 4p on every £1 received) but they have a potential solution to this as well. When the tip is made the customer is asked if they would like to cover this charge in their tip, currently over 43,000 tips have been taken on Tipjar from 3,750 users and 98% of those have covered the transaction fee.
When it comes to paying tax on the tips you receive through this system we are not tax experts however on the Tipjar FAQ page this is covered.
Is this the perfect solution? No, because cash is, but that is more than ever becoming a thing of the past. The QR aspect remains an unknown quantity and let’s be honest a potential pain in the arse at 11pm on a Friday night. However, it is, on paper, the best option besides tronc currently available and therefore potentially worth investigating.
Is it the end of tronc? In the short term it seems unlikely, we suspect many businesses who take it on will run it alongside tronc to start with whilst customers get used to the QR code aspect. Logic dictates that the more businesses offering it the sooner that familiarity will come and we can’t see many tears being shed for tronc if it sails into the night.
For more information on Tipjar head to their website